Sunday, April 11, 2010

Public sector entrepreneurship

1.1 Background
Since the I 970s. the public sector has been continuously pushed to improve the efficiency and effectiveness of its performance. Government has responded to a turbulent external environment with decreasing tax bases, rapidly changing technology, diversification of the public’s demands, and heightened accountability. Entrepreneurship can be an important component that leads to generating alternative revenue, improving operational performance, and developing innovative ways to meet socioeconomic demands. The virtues of traditional ideas about government, however, have been challenged as significant changes in economic, societal, demographic, and cultural movements have emerged. The desire to be more competitive in a dynamic environment, for instance, demands changes in the role of government. Public sector inefficiencies driven by stability. regulation, and equality arc no longer tolerated. Many public services already have been confronted with considerable competition from the private sector (Peters, 1996). Within traditional models of administration, government may have a difficult time managing the emerging issues effectively.

The administrative reform movement has been remarkable in the number of reform initiatives and the fundamental nature of changes being addressed. The public sector has created and adopted innovative ways for structuring and managing government arrangements as a consequence of administrative reform activities. Many administrative reforms and efforts under the umbrella term “reinvention” have been introduced and implemented to improve government performance. One approach, the new public management, advocates the public sector’s shift toward the efficiency-dominated nature of the public interest. That statement that government services have to be delivered by the public entity, indeed, has been questioned following tight budgets and greater competition. With the goal of performing government tasks effectively, a number of market-based approaches have been introduced into the public sector: privatization, public-private partnerships, outsourcing. and public entrepreneurship. Each approach has pros and cons that vary with time and place. Depending on the unique circumstances, the effects of each technique may have different results. In recent years, the models of outsourcing, public-private partnership. and privatization have been well researched. Entrepreneurial attempts in the public sector, however, are less clearly addressed than other approaches.

The emerging form of entrepreneurial government is introduced as a means to market-oriented practices for better services (Drucker, 1985; Osborne & Gaebler, 1992). The entrepreneurial model refers to a major tool for innovation and productivity in both public and private sectors. The adoption of the private entrepreneurial rationale into the public sector is critical to satisfying the public’s needs for higher efficient, more responsive, and lower cost government (Cohen & Eimicke, 2000). Entrepreneurial government provides better opportunities for public administrators to innovatively deliver public services. In fact, the practices of privatization reduce public sector involvement and responsibility as a significant service provider (Morris & Jones, 1999). As a result, adopting entrepreneurship practices into the public sector through improving in-house capacities may be “the one best way” to resolve recurrent perceptions of “failing government” services (Liewellyn & Jones. 2003).

Some scholars argue that emphasis on entrepreneurship challenges many of the core values of the public sector (Cohen & Eimicke, 2000) and democratic theory (Terry, 1998), because characteristics of entrepreneurial management are somewhat opposite those of the public sector (deLeon, 1996). Entrepreneurial exercises may conflict with public service values such as equity, accountability (Roberts & King, 1996). and responsiveness. Government functions are of a more nebulous nature than those of the private sector, because the values of public organizations are multiple, inconsistent and often contradictory (Rainey, 1983). Implementing innovative approaches to entrepreneurship in the public sector is not easy given existing government management practices and organizational structures. However, the propensity toward increasing efficiency and effectiveness allows the public sector to adopt entrepreneurial exercises. The search for efficiency within the public sector does not prevent promoting other worthy public goals. Adopting entrepreneurial thinking may allow the public sector to become less ossified. As the application of entrepreneurial ideas to the public sector gains acceptance, the focus can shift to questions about their implementation in a specific context. An attempt to establish an appropriate balance between entrepreneurial management and public organizational structures is needed.
The effects of entrepreneurial activities tend to be underestimated by traditional government thinking. Entrepreneurial practice in the public sector lags behind that in the private sector due to the traditional assumptions of public organizations. The public sector lacks built-on mechanisms for encouraging entrepreneurial arrangements within its own structures. The concept of public entrepreneurship requires different emphases and boundaries from those in the private sector. Without a tightly coupled configuration of entrepreneurship in the public sector, the fabric of public entrepreneurial attempts unravels.

1.2 Statement of Purpose
Despite the enthusiasm and widespread belief in the applicability of entrepreneurial practices to the public sector, there are still ongoing debates and doubts about their suitability to public organizations. However, government reforms and efforts toward market-oriented organizations have made it possible to stimulate entrepreneurial practices in public sector arrangements. Indeed, searching for innovative opportunities, providing better services, and adding new values as a consequence of implementing entrepreneurial approaches to public entities arc not contradictory to long-established views of public management. Since public management is a multi-dimensional concept (Valker & l3oync, 2006). adding an entrepreneurial framework will provide important insights on government’s reform strategies.

Existing research on public sector entrepreneurship has focused on a normative approach utilizing examples of prevailing individual entrepreneurs. Public entrepreneurship does not just rely upon individual’s traits and characteristics. While prior research is dedicated to the study of micro-level explanations for entrepreneurial behavior, a fuller assessment requires an understanding of the macro conditions that would foster or hinder entrepreneurship. Forster, Graham & Wanna (1996) conceived that individual qualities and motivations arc far less important than the institutional and collective commitment to public entrepreneurialism. Organizations themselves perform entrepreneurial activities (Miller & Friesen, 1982; Cornwall & Perlman, 1990; Jelinek & Litterer, 1995) and organizational characteristics facilitate a propensity toward entrepreneurship (Slevin & Covin. 1990). Focusing on psychological and behavioral characteristics of individuals is insufficient to understand the very heart of public entrepreneurship as a systematic mechanism for improving government performance. Gartner & Carland (1988) suggested that the study of the personal characteristics of entrepreneurship hold little expectation for furthering the field. Rather, an organizational perspective on entrepreneurship will provide a “big picture” to drive government improvement. Organizational arrangements restrict individuals’ opportunities and alternatives and increase the probability of certain types of behavior (DiMaggio. 1988).

On the other hand, some research has presumed that the single most effective way to attain public sector entrepreneurship is to be more businesslike in structure and function. Public sector entrepreneurship has multidimensional attributes. The term public entrepreneurship is more than simply being enterprising or businesslike (Sadler, 2000). Osborne & Gaebler (1992) even conclude that government cannot be run like a business because of fundamental differences between the public and private sectors. Public entrepreneurship is not financially driven (Boyett, 1996); therefore principles of private entrepreneurship cannot be strictly applied to the public sector. Researchers have addressed the application of entrepreneurial behaviors and activities that need to be adjusted before being applied to public sector settings (Cornwall & Perlman. 1990; Boyett, 1996). The study of public entrepreneurship requires a different research scope based on structural and managerial contexts from private sector entrepreneurship. The practices of public sector entrepreneurship are not simply an echo of those of the private sector.

Little research has been conducted to develop a theoretically consistent, empirically robust model of public entrepreneurship to predict the effects of public entrepreneurial practices. Public sector entrepreneurship research is still emerging. where growth as a research area is rapid but institutional arrangements in the public sector are not definitely established yet. Instead of analyzing a significant set of empirical phenomena, the promise of public entrepreneurship has become too rhetorical and fragmented due to the lack of evidence. The language of public entrepreneurship is blurred and over-used without conceptual agreement or a generally accepted model. The lack of an appropriate framework for public entrepreneurship from the field of public administration has undermined its contributions to the improvement of government functions. Moreover, the misleading expectations on the effects of public entrepreneurship at the organizational level may generate a less considerable commitment of entrepreneurship in the public sector.

The field of public entrepreneurship needs to define the extent and nature of its research and prove the effect of entrepreneurial functions in the public sector through coupling a variety of intellectual connections. In addition, the accumulation of empirical knowledge is needed to understand this field. This study focuses on organizational contexts to defining the nature of public sector entrepreneurship and determinant factors as to public entrepreneurship. The primary purpose of this study is to determine what factors influence the adoption of entrepreneurial behaviors and activities in the public sector. The second purpose is to examine the relationships between these determinant factors and three dimensions of public entrepreneurship, as well as the relationships between three-dimensional public entrepreneurship and organizational performance. The third purpose is to analyze the effects of determinant factors and three sub-dimensions of public entrepreneurship on organizational performance. The research addresses the following questions: What are the relationships between determinant factors and the three dimensions of public entrepreneurship, as well as the relationships between the three dimensions and organizational performance? To what extent do such determinants and the three dimensions of public entrepreneurship influence organizational performance at the state level?

1.3 Significance of the Research
While theoretical debates on public entrepreneurship have received significant attention, no generally accepted model of public entrepreneurship has verified, and empirical evidence has been lacking as well. The literature on entrepreneurship in the public sector usually links private sector models to public entrepreneurial practices based on individual attributes. However, the public sector differs from the private sector in its objectives, obligations, accountability, and responsibility to stakeholders. Simply copying entrepreneurial practices from private sector may lead to a fundamental misunderstanding of the roles of government (Mintzberg. 1996).

Adopting and implementing entrepreneurial arrangements in the public sector requires performance of equivalent public sector traditional tasks. Public sector entrepreneurial activities and opportunities are difficult to measure empirically because they are poorly defined. Without a solid theoretical framework and systematic analysis about public entrepreneurship, the magnitude of its applicability and its functions may be undermined in the public sector. This study will ultimately enhance its own field of public entrepreneurship which focuses on improving state government performance. The public entrepreneurship framework presented here will contribute to conducting more in- depth and systematic analysis in the organizational setting.

1.4 Outline of the Research
Chapter One provides the overall introduction to this study by presenting the background of entrepreneurship research, the purpose of this research, and the significance of this study.

Chapter Two reviews the extensive literature on entrepreneurship by providing theoretical background, main research trends, and the theory of entrepreneurship. The importance of entrepreneurial activities is traced back to three main streams of orientations — economic, human behavior, and organizational. The next section explores the definitions and multidimensional construct of entrepreneurship, especially three dimensions of entrepreneurship — risk taking, innovation, and pro-activity.

Chapter Three focuses on concepts, definitions, and dimensions of public entrepreneurship. This research frames three dimensions of public entrepreneurship at the organizational level tends to vary independently of the others.

Chapter Four proposes theoretical and empirical frameworks of public entrepreneurship and hypothesizes the relationships between determinant factors and three dimensions of public entrepreneurship, as well as the effects of determinants on organizational performance. The model of public entrepreneurship will provide a comprehensive empirical insight of public entrepreneurial activities at the state level.
Chapter Five discusses a detailed research design and methodology, including sampling. operationalization. research design and questionnaire validation, data collection, and data analysis procedures. A two-stage procedure pretest is conducted to correct weaknesses of questionnaire and validate survey questions.
Chapter Six conducts an empirical analysis to test proposed hypotheses and research questions. This research utilizes three statistical techniques: exploratory factor analysis utilizing the principal component technique with varimax rotation, multiple regression analysis, and multiple group path analysis. Before conducting primary empirical analysis, descriptive data analysis and reliability test are performed to test data applicability.

Chapter Seven discusses major results, their implications, the limitations of this research, and the directions of future research in the field of public entrepreneurship. Based on the findings, the research suggests theoretical implications for the field of public entrepreneurship, and policy and practical implications for state government agencies. Furthermore, this study proposes several future research issues in measurement and a boundary of public entrepreneurial research.

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